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balu736 [363]
3 years ago
15

The required return on the stock of Moe's Pizza is 10.8 percent and aftertax required return on the company's debt is 3.40 perce

nt. The company's market value capital structure consists of 69 percent equity. The company is considering a new project that is less risky than current operations and it feels the risk adjustment factor is minus 1.9 percent. The tax rate is 39 percent. What is the required return for the new project?
Business
1 answer:
saw5 [17]3 years ago
5 0

Answer:

6.88%

Explanation:

Weighted Average Cost of Capital (WACC) = [After Tax Cost of Debt * Weight of Debt] + [Cost of equity * Weight of Equity]

WACC = [3.40%*0.39] + [10.80%*0.69)

WACC = [0.034*0.39] + [0.108*0.69)

WACC = 0.01326 + 0.07452

WACC = 0.08778

WACC = 8.78%

The required return for the new project = Weighted Average Cost of Capital – Risk Adjustment Factor

The required return for the new project = 8.78% - 1.90%

The required return for the new project = 6.88%

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Answer:

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Explanation

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More production means more requirement of workers which will eventually lead to more employment opportunities in the country. However, this increase   would lead to modest increase in prices due to more purchaser power in the country.

4 0
3 years ago
What is the specific government agency charged with overseeing discrimination in employment practices
AVprozaik [17]

Answer:

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Explanation:

Hope This Helps!!

7 0
3 years ago
The midpoint method is used to compute elasticity because it A. automatically rounds quantities to the nearest whole unit. B. gi
gizmo_the_mogwai [7]

Answer:

B. gives the same answer regardless of the direction of change

Explanation:

The computation of the price elasticity of demand using mid point formula is shown below:

Price elasticity of demand = (Percentage change in quantity demanded) ÷ (percentage change in price)

where,

Percentage change in quantity demanded is

= (change in quantity demanded ÷ average of quantity demanded)

And,

The percentage change in price is

= (percentage change in price ÷ average of price)

Therefore, it reflects the same answer  

6 0
4 years ago
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3 0
3 years ago
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i hope this helps..;)


5 0
3 years ago
Read 2 more answers
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